With university costs increasing every year and house prices rising to a level that puts them out of reach for most young couples, I can understand why you are concerned about saving for your children’s future. My best advice is to start saving as soon as you can. Putting aside even small sums of money when your child is young can given them a substantial headstart in 18 years time.

It is important that you deal with the voucher immediately. If you not do so within 12 months, the Government will allocate your voucher to a provider of its choice.

The child trust fund website at www.childtrust.gov.uk provides a great deal of information, including how to make further contributions.

The Government will contribute 250 to get your child’s account started, an additional 250 for children in families on lower incomes and more when your child is seven. The contribution to be paid on the child’s seventh birthday is yet to be decided.

This means that even if you do not make any additional contributions, there will still be money growing in the account for your child to benefit from when they are 18. But the child trust fund offers you, your family and friends the chance to save up to 1,200 a year tax-free for your child in addition to the contributions made by the Government. Every contribution, no matter how small, will make a difference in the long run. These savings will build into an asset that your child can use as a young adult to help them make the most of the opportunities ahead.

For the first time, all children will have some money behind them at the start of their adult lives. One of the most important points is that benefits will accumulate tax-free under current legislation.

The parent of every child born since September 2002 will eventually receive a voucher. The payment will be made to anyone claiming child benefit for a newborn.

All child trust fund providers must be approved by HM Revenue & Customs and must meet the various standards that have been set. However, different providers offer different types of account. So before deciding where to place your voucher, you need to decide what type of investment is most suitable.

The first decision you need to make is to whether to go for a deposit-style or stocks and shares-based child trust fund. There are arguments in favour of both options although I would advise you to opt for an account based on equities, which is also the Government’s preferred option. Historically, stocks and shares have performed better than deposits over long periods of time.

Although recent years have seen dramatic falls in share prices, in every 18-year period over the last 80 years, stocks and shares have generally outperformed savings accounts, as confirmed on the Government’s child trust fund website.

Some providers offer child trust funds based on ethical stocks and shares, if you feel this would be more appropriate for your child’s money. You say you also wish to make savings for your older child.

The Children’s Mutual is not only a child trust fund provider but is also the UK’s only specialist in long-term savings for children and can meet all your requirements for your two children.

The Children’s Mutual offers both low-cost stakeholder and non-stakeholder child trust funds and also provides an ethical option.

Of particular interest is that, as far as I am aware, it is the only provider which offers a matching account which mirrors the portfolio of the child trust fund. This means that if you want to treat both children fairly, you can do so with The Children’s Mutual.

In summary, due to the length of time the money will be invested, I would recommend a stocks and shares-based account.

If you want to provide the same contract for both your children, I would investigate the products offered by The Children’s Mutual as one of this country’s leading providers of specialist savings schemes.

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